Alberta may boom and bust when it comes to the energy industry, but one thing the province can pride itself on is an affordable housing market. One only needs to look to the far west where the average home price peaked at $1.8 million in Vancouver in 2017, or the east where last year’s average was $735,021, to feel good about the $400,000 average Alberta enjoys. Now, as 2018 gets underway, what can we expect from the Edmonton market?
Darcy Torhjelm, 2018 chair of the Realtors Association of Edmonton, weighs in.
“The year-over-year sales have risen overall about 1.5 per cent,” says Torhjelm. “It’s not a large increase, but it does show that there is more confidence in the market. The overall inventory is over up over previous years, which does also indicate the recession that we are currently working our way out of. I am fairly confident that the worst is behind us, and although we are not looking at large increases in prices or sales, this will bring some stability and confidence to the overall housing market.”
Torhjelm breaks it down, saying, “The single family homes’ numbers overall have been steady with not much increase in overall sales or prices. The higher priced properties, over $500,000, have been a little more difficult to sell in many areas, but there are still sales happening. The duplex/townhouse market has seen the largest growth with around 4-5 per cent in sales and price increases in most areas. Condos look to be the most difficult with inventory, climbing more in this category – the pressure is going to be downward as sellers find fewer buyers and more competition.”
This year sees another adjustment of the mortgage rules.
“We have seen mortgage rule changes in the past, and although they did seem to impact the housing market immediately, the overall effect was minimal long term,” Torhjelm confides. “Of course, the economy and other factors could come into play more down the road, and that could change the overall market.”
“Currently we are not looking to see much change for the upcoming year,” Torhjelm concludes. “I feel that ‘stable’ is the word of the day for the housing market in all categories, and this, in my opinion, will bring more confidence in the market and will be good for both buyers and sellers. Buyers will have lots of choice in the market and sellers will have the opportunity to sell their property, although they may need to be patient and talk specifically with their Realtor to ensure they understand the competition in their category, to ensure they are priced correctly, and to understand how their property shows and the effect of the amenities or lack of amenities their property has.”
Nathan Mol, REALTOR ®, Liv Real Estate, is also happy to speak to the current market trends.
“A combination of factors,” he says are behind the year-over-year uptick, “[The numbers have] stayed firm due to stable demand from household formation; couples are still getting married and wanting to start a family, in many cases, and owning their own home is a big part of it; but there was definitely an element of some buyers moving forward with their purchasing decision prior to the end of last year to qualify under the previous mortgage rules without the new stress test.”
Mol continues, “I think the rule changes will have only a very modest impact on the Edmonton market, whereas the stress tests implemented in Oct 2017 affected primarily first time buyers. I think the January 1st changes for those with a 20 per cent (or more) down payment will have an impact only on some move-up buyers since they are more likely to have a 20 per cent down payment to make the move-up possible. These buyers tend to be in their 30s-40s, have more money saved up and, in my experience, are less likely to buy the most expensive house they qualify for versus the younger first-time buyers who have more limited resources.
“I have been hearing from colleagues in Toronto and Vancouver that buyers there are more likely to be affected since incomes are similar to Edmonton, but prices are 2-4 times higher. They have no choice but to maximize the amount of mortgage they qualify for – they simply will not be able to afford last year’s prices. In Edmonton, there are some buyers who will have to adjust their price range downward, but it is the minority of buyers who purchase at the top of their budget, in my experience.”
Glenda Groeneveld, REALTOR®, RE/MAX Excellence, agrees that the sales trends are a result of several varying factors, some of which include rates, inventory, and timing for the buyer/seller. In her experience, single family properties are moving the fastest, but she’s seen an increase in duplex and townhome sales, which she chalks up to their affordable option for ownership.
As for the 2018 mortgage rules, “The previous mortgage rates and rules had continued to motivate buyers, especially those that were purchasing for the first time,” confirms Groeneveld. “This, I feel, in turn benefited the seller as well. If the housing inventory is good and the buyer is ready to purchase, they will move forward. Time will tell how the new rules affect our market. For a buyer, it means their purchase qualifying price will be lower. Whether or not the new rules are necessary for us at this time, we will always have buyers and sellers. If a buyer or seller wants to move forward in a real estate transaction, they will. It is just going to look different than it has in the past.”
There is another trend looming that has some homeowners rethinking their residence’s footprint – or are they? The sweeping tiny house trend, which sees families of all sizes ditching their digs to live in 500 or less square feet of compact space, is hot on television right now. Is that the actual reality here in the Capital City?
Not so much, say the Realtors.
“I haven’t had any buyers approach me looking for tiny homes,” confirms Mol. “There are only a very small number [of tiny homes] in Edmonton that are flying under the radar of the City, for now, since current zoning bylaws don’t allow for them. If, however, the City starts allowing for them, I could see a small segment of the buyer pool looking at them as an option. In Edmonton, we do have a good share of neighbourhoods with small sub-800 square foot bungalows, but there is generally a strong preference for today’s buyers to want 900 square feet or larger for detached homes.
Groeneveld has also not been flooded with requests for tiny living.
“I have not had a lot of inquiries or interest from my clients regarding tiny living,” she smiles. “Finding an area with proper zoning that allows for tiny living could be difficult right now, but there are hints of it in different metropolitans where the local offices are talking about tiny living or are trying to develop policies that will accommodate tiny living.”
Right now in Edmonton, it’s business as usual in the real estate market. Properties are selling, prices are holding, and maybe, in the distant future, we’ll even have a small tiny community within the city limits. Meanwhile, for expert buying and selling advice, visit a certified REALTOR so you can find and love the place that you call home.